Will Landlords Face Tighter Mortgage Affordability Checks?
The Bank of England has suggested that buy-to-let lenders introduce more stringent affordability checks when processing lending requests from landlords who have at least 4 properties that they are letting out to tenants. It will be interesting to see the reaction to this announcement.
Apparently, landlords will be required to provide lenders with full details of other sources of income as well as other expenditure. This is in addition to providing details of rental income. This is because there is concern at the financial stability within the buy-to-let sector
It is also interesting to note that lenders will also be required to take into account the impact on a landlord’s finances of a potential rise interest rates may have on the likes of buy-to-let mortgages.
There are many lenders that already operate stringent lending criteria when it comes to assessing applications from landlords but it is hoped that the new proposals suggested by the Bank of England will bring all lenders into line in this respect. This is something that will probably be welcomed by many involved in the sector.
It will be interesting to see how the above impacts on the buy-to-let sector. Will it put some existing landlords off from expanding to buy more properties to rent out and will it result in fewer people wanting to invest in buy-to-let properties because of the more stringent lending criteria? The answer is probably “Yes”. Therefore, would this mean that there will be fewer investment properties becoming available to rent at a time when there is a shortage of rental properties and an ever-growing number of tenants looking for suitable accommodation to rent?
The consultation period is to last a few months so it will be interesting to hear what is eventually decided and how it impacts on landlords requiring finance to invest in buy-to-let properties. We will keep you updated.